• USD/INR clings to mild gains after bouncing off one-month low, snaps five-day losing streak.
• Fed’s hawkish halt joins downbeat China data to weigh on Indian Rupee amid sluggish session.
• US Retail Sales, mid-tier activity, jobs data eyed as FOMC highlights data dependency for each upcoming meeting.

USD/INR picks up bids to print minor intraday gains around 82.15 during the first positive day in six amid early Thursday in Europe. In doing so, the Indian Rupee (INR) pair bounces off the lowest level in five weeks as the US Dollar portrays the market’s consolidation of the latest losses around the multi-day low.

That said, the US Dollar Index (DXY) rebounds from the lowest level in a month to snap a two-day downtrend near 103.30 by the press time.

The greenback’s gauge versus the six major currencies dropped to a fresh multi-day low after the US Federal Reserve (Fed) kept the benchmark Fed rate unchanged at 5.0-5.25%, matching market expectations of pausing the multi-month-old hawkish cycle that propelled rates for 10 consecutive times.

It’s worth noting, however, that the US Dollar’s latest gains could be linked to the increasing odds of witnessing a Fed rate hike in July. On the same line, the Fed’s dot plot rose 30 bps from March for 2024 and 2025 to 4.6% and 3.4% respectively while the median rate forecasts suggest two more rate increases in 2023. Further, no rate cuts nor recession is expected in the current year whereas the median estimation for the US Gross Domestic Product (GDP) rose to 1.0% from 0.4% in March. Additionally, Powell’s speech unveils a “meeting by meeting” approach for decision-making but signals July as a ‘live’ meeting, suggesting a 0.25% rate hike.

On the other hand, downbeat prints of China Retail Sales and Industrial Production weighed on the market sentiment in the Asia-Pacific zone.

Moving on, US Retail Sales for May and other mid-tier activity data, as well as the weekly Jobless Claims, will be important for the USD/INR pair traders as the Fed has already highlighted the importance of each incoming data for decision-making.

Technical analysis

A clear bounce off the 200-DMA support of 82.00 joins the below 50.0 levels of the RSI (14) line to underpin hopes of USD/INR bottom-picking, suggesting a further recovery towards the 100-DMA resistance of near 82.30.

It’s worth noting, however, that the USD/INR bulls need to cross a three-week-old resistance line, close to 82.50 by the press time, to retake control.

Meanwhile, a downside break of the 200-DMA should conquer an upward-sloping support line from November 2022, near 81.90 at the latest, to convince the USD/INR bears in challenging the April month’s bottom of around 81.50.

USD/INR: Daily chart

Trend: Limited recovery expected